Hospitals, lawmakers want to end Medicare 'manipulation'

Lawmakers are looking to reverse a health reform provision that led to a $250 million annual windfall for Massachusetts hospitals, The Boston Globe reported.

Sens. Tom Coburn (R-Okla.) and Claire McCaskill (D-Mo.) last week introduced a bill that would eliminate the provision requiring Medicare reimbursement for hospital wages come from a national pool.

Another Medicare rule says a state's urban hospitals must be paid the same amount as rural hospitals. Massachusetts has only one rural hospital on Nantucket Island, where the high cost of living and bigger Medicare payments drive up payments for every other hospital in the state, FierceHealthFinance previously reported.

The Affordable Care Act provision already prompted an angry letter from a group of 21 hospital associations arguing that allowing hospitals in Massachusetts to boost their Medicare payments is unfairly upping fees for other states.

In fact, the Massachusetts windfall would cause hospitals in 49 states to lose more than $3.5 billion in Medicare funding over the next 10 years, according to the letter to President Obama.

"Scarce Medicare funding should reward value and efficiency in healthcare, not be diverted based on manipulation of obscure payment formulas," the letter states.

Hospitals have been outraged over the Medicare loophole since Sen. John Kerry (D-Mass.) added the amendment to the healthcare law in 2011.